TIC Solutions, Inc.: Form 10-Q for the period ended Jun 30, 2026

The following is a discussion of the results of operations of: (i) TIC Solutions, Inc. and its subsidiaries (collectively, the “Company,” “we,” “our,” “us,” or “TIC Solutions”) (formerly Acuren Corporation) for the three and six months ended June 30, 2026, compared to the results of operations for the three and six months ended June 30, 2025. This discussion should be read in conjunction with the information contained in the unaudited TIC Solutions, Inc. condensed consolidated financial statements and the notes related thereto included elsewhere in this Quarterly Report and the audited financial statements for the year ended December 31, 2025, included in our Annual Report on Form 10-K. The tables below are presented in thousands except for percentages and share and per share amounts.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report contains “forward-looking statements”. These forward-looking statements are based on beliefs and assumptions as of the date such statements are made. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms including “expect,” “anticipate,” “project,” “will,” “should,” “believe,” “intend,” “plan,” “estimate,” “potential,” “target,” “would,” and similar expressions, although not all forward-looking statements contain these identifying terms. These forward-looking statements are based on our current expectations and assumptions and on information currently available to management and include, among others, statements concerning our expectations regarding, as of the date such statements are made: (i) economic, industry and market conditions, including as a result of inflation, and trade and geopolitical conflicts, (ii) the sufficiency of our current sources of liquidity to fund our future liquidity requirements, our expectations regarding the types of future liquidity requirements and our expectations regarding the availability of future sources of liquidity, (iii) the cost of compliance with laws and regulations, (iv) the impact of legal claims and related contingencies, (v) estimates and liabilities regarding accounting and tax matters, and (vi) the Company’s acquisitions, including the NV5 Acquisition and the goodwill, synergies and benefits of such acquisition.

These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including, among others, (i) economic conditions affecting the industries we serve, including the construction industry and the energy sector, as well as general economic conditions; (ii) adverse developments in the credit markets that could adversely affect funding of construction projects; (iii) the ability and willingness of customers to invest in infrastructure projects; (iv) a decline in demand for our services or for the products and services of our customers; (v) the fact that our revenues are derived primarily from contracts with durations of less than six months and the risk that customers will not renew or enter into new contracts; (vi) our ability to successfully acquire other businesses, successfully integrate acquired businesses into our operations and manage the risks and potential liabilities associated with those acquisitions; (vii) our ability to compete successfully in the industries and markets we serve; (viii) our ability to properly manage and accurately estimate costs associated with specific customer projects, in particular for arrangements with fixed price terms; (ix) increases in the cost, or reductions in the supply, of the materials we use in our business and for which we bear the risk of such increases; (x) the inherently dangerous nature of the services we provide and the risks of potential liability; (xi) the seasonality of our business and the impact of weather conditions; (xii) our ability to remediate any material weaknesses; (xiii) the impact of health, safety and environmental laws and regulations, and the costs associated with compliance with such laws and regulations; (xiv) our substantial level of indebtedness and the effect of restrictions on our operations set forth in the documents that govern such indebtedness; (xv) a prolonged government shutdown, and (xvi) our compliance with certain financial maintenance covenants in the documents governing our indebtedness and the effect on our liquidity of any failure to comply with such covenants.

Please see the section entitled “Risk Factors” located in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, and Part II, Item 1A of this Quarterly Report for a further discussion of these and other risks and uncertainties which could affect our future results. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. We undertake no obligation to revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events, except to the extent we are legally required to disclose certain matters in our SEC filings or otherwise.

Overview

We are a leading provider of tech-enabled asset integrity, engineering and consulting, and geospatial services. We provide mission-critical services across the full lifecycle of industrial assets, buildings, and public infrastructure, from planning and construction through operations and ongoing maintenance. Our services are often non-discretionary and are driven by regulatory and compliance requirements, customer risk-management policies, maintenance needs, and the need to support the safety, reliability, and useful life of critical assets and infrastructure.

We operate primarily in North America and serve a diversified base of clients across our principal end markets: oil and gas, industrials, buildings, power and utilities, infrastructure, natural resources, and aerospace and defense. Within these markets, we support oil sands, refining, midstream, and upstream operations; manufacturing, fabrication, chemical, and metal-processing facilities; commercial, data center, institutional, and residential buildings; power generation, gas transmission and distribution, and electricity infrastructure; geospatial and environmental services; highways and roads, transportation, water, and parks and recreation; and federal, state, regional, and municipal customers across public-sector applications.

On October 10, 2025, we changed our name from Acuren Corporation to TIC Solutions, Inc.

Recent Developments and Certain Factors and Trends Affecting Results of Operations

Summary of Acquisitions

The Company completed four immaterial acquisitions during the periods presented which were not significant to our results of operations.

Economic, Industry and Market Factors

We may experience increased costs associated with the recent developments around tariffs between the United States, Canada, and other international jurisdictions and will continue to monitor market conditions and respond accordingly. We also have observed some impact from inflationary pressures during 2025 and into 2026. Although we look to mitigate the impact of these pressures with a combination of cost management and price initiatives, there can be no guarantee that these initiatives will be successful. There has been no material effect on our business from the Russian-Ukrainian or the Middle Eastern conflicts, although these conflicts may have an impact on certain end markets, results of operations or liquidity or in other ways which we cannot yet determine.

The Organization for Economic Co-operation and Development (“OECD”) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as "Pillar 2"), with certain aspects of Pillar 2 effective January 1, 2024, and other aspects effective January 1, 2025. The U.S. and other countries continue to discuss how Pillar 2 will apply to U.S. companies. We are continuing to evaluate and monitor the impact of Pillar 2 and the evolving legislative landscape. To date, Pillar 2 has not had a material impact on our effective tax rate or condensed consolidated financial statements.

Description of Key Financial Statement Line Items

Revenue

Revenue is recognized to depict the transfer of goods or services to a customer at an amount that reflects the consideration we expect to receive in exchange for those goods or services. Our performance obligations are satisfied as work progresses or at a point in time. Revenue is recognized over time based on time and material incurred to date which best portrays the transfer of control to the customer. For our cost-reimbursable contracts, revenue is recognized over time using direct costs incurred or direct costs incurred to date as compared to the estimated total direct costs for performance obligations because it depicts the transfer of control to the customer. Contract costs include labor, sub-consultant services, and other direct costs. Revenue from services transferred to customers at a point in time is recognized when control of the promised deliverable transfers to the customer, which is generally upon completion, delivery, or customer acceptance of reports or analyses.

Cost of revenue

Cost of revenue consists primarily of direct labor, sub-consultant services, and other direct costs. Other direct costs include materials and costs, such as supplies, tools, facility costs, and depreciation of equipment related to our services as well as travel, per diem, and lodging costs. Labor costs are recognized as labor hours are incurred in delivering services.

Selling, general and administrative expenses

Selling, general and administrative expenses consist primarily of certain indirect costs of providing our services, employee compensation, information systems and technology costs, share-based compensation, depreciation, amortization of intangibles, and facility related expenses.

Results of Operations

The comparability of our operating results for the three and six months ended June 30, 2026 and June 30, 2025 was impacted by the NV5 Acquisition, which closed on August 4, 2025. In the discussion of our results of operations for these periods, we may quantitatively disclose the impacts of the NV5 Acquisition to the extent they remain ascertainable.

The following table summarizes our results of operations for the periods indicated:

Comparison of the three months ended June 30, 2026 to the three months ended June 30, 2025

Revenues

Revenues were $584.3 million for the three months ended June 30, 2026, an increase of $270.4 million, or 86%, compared to $313.9 million during the three months ended June 30, 2025. The increase in revenues was primarily driven by incremental revenues of $287.7 million resulting from the NV5 Acquisition. For additional information regarding the factors affecting revenues, see “Operating Segment Results” below.

Cost of revenues

Cost of revenues were $380.2 million for the three months ended June 30, 2026, an increase of $140.4 million, or 59%, compared to $239.8 million during the three months ended June 30, 2025. The increase was primarily driven by $150.7 million of incremental cost of revenues resulting from the NV5 Acquisition. For additional information regarding the factors affecting cost of revenues, see “Operating Segment Results” below.

Gross profit

The following table presents gross profit and gross profit margin, defined as gross profit as a percentage of revenue, for the three months ended June 30, 2026 and June 30, 2025:

31

Gross profit was $204.2 million for the three months ended June 30, 2026, an increase of $130.1 million, or 176%, compared to $74.1 million during the three months ended June 30, 2025. Gross profit margin was 35% for the three months ended June 30, 2026 compared to 24% during the three months ended June 30, 2025. The increase in gross profit and gross profit margin was primarily driven by the NV5 Acquisition. The NV5 Acquisition contributed $136.9 million of gross profit and 48% gross profit margin. NV5’s consulting & engineering and geospatial services have higher gross profit than the TIC Solutions legacy services. For additional information regarding the factors affecting gross profit, see “Operating Segment Results” below.

Selling, general and administrative expenses

The following table presents selling, general and administrative expenses (“SG&A expenses”) and SG&A expenses as a percentage of revenue for the three months ended June 30, 2026 and June 30, 2025:

SG&A expenses were $193.3 million for the three months ended June 30, 2026, an increase of $137.6 million, or 247%, compared to $55.8 million during the three months ended June 30, 2025. The increase in SG&A expense was primarily driven by incremental expenses of $94.7 million resulting from the NV5 Acquisition, increases in amortization expense of $23.0 million resulting from the NV5 acquisition, and increases in share-based compensation expense and acquisition-related transaction and integration expenses.

Depreciation and amortization expense

Total depreciation expense for property and equipment and amortization expense for intangibles were recognized as follows:

The increase in depreciation and amortization expense of $30.9 million, or 105%, was primarily driven by incremental amortization expense of $23.0 million and depreciation expense of $6.4 million resulting from the NV5 Acquisition.

Interest expense, net

Interest expense, net was $28.4 million for the three months ended June 30, 2026, an increase of $12.9 million, or 84%, compared to $15.5 million during the three months ended June 30, 2025. The increase in interest expense was primarily driven by an increase in our indebtedness as a result of the NV5 Acquisition.

Income taxes

The Company recorded an income tax benefit of $3.2 million for the three months ended June 30, 2026 compared to an income tax expense of $3.9 million during the three months ended June 30, 2025. The income tax benefit for the three months ended June 30, 2026 was primarily driven by the loss recognized in the period and the reversal of an uncertain tax liability from a prior acquisition. See “Note 13. Income Taxes” for further discussion.

Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025

Revenues

Revenues were $1.1 billion for the six months ended June 30, 2026, an increase of $524.2 million, or 96%, compared to $548.1 million during the six months ended June 30, 2025. The increase in revenues was primarily driven by incremental revenues of $540.9 million resulting from the NV5 Acquisition. For additional information regarding the factors affecting revenue, see “Operating Segment Results” below.

Cost of revenues

Cost of revenues were $706.9 million for the six months ended June 30, 2026, an increase of $276.5 million, or 64%, compared to $430.4 million during the six months ended June 30, 2025. The increase was primarily driven by incremental cost of revenues of $283.4 million resulting from the NV5 Acquisition. For additional information regarding the factors affecting cost of revenues, see “Operating Segment Results” below.

Gross profit

The following table presents gross profit and gross profit margin, defined as gross profit as a percentage of revenue, for the six months ended June 30, 2026 and June 30, 2025:

Gross profit was $365.5 million for the six months ended June 30, 2026, an increase of $247.7 million, or 210%, compared to $117.8 million during the six months ended June 30, 2025. Gross profit margin was 34% for the six months ended June 30, 2026 compared to 21% during the six months ended June 30, 2025. The increase in gross profit and gross profit margin was primarily driven by the NV5 Acquisition. The NV5 Acquisition contributed $257.5 million of gross profit and 48% gross profit margin. For additional information regarding the factors affecting gross profit, see “Operating Segment Results” below.

Selling, general and administrative expenses

The following table presents selling, general and administrative expenses (“SG&A expenses”) and SG&A expenses as a percentage of revenue for the six months ended June 30, 2026 and June 30, 2025:

SG&A expenses were $383.7 million for the six months ended June 30, 2026, an increase of $274.8 million, or 252%, compared to $108.9 million during the six months ended June 30, 2025. The increase in SG&A expense was primarily driven by incremental expenses of $190.0 million resulting from the NV5 Acquisition, increases in amortization expense of $46.0 million resulting from the NV5 acquisition, and increases in share-based compensation expense and acquisition-related transaction and integration expenses.

Depreciation and amortization expense

Total depreciation expense for property and equipment and amortization expense for intangibles were recognized as follows:

The increase in depreciation and amortization expense of $61.2 million, or 105%, was primarily driven by incremental amortization expense of $46.0 million and depreciation expense of $11.6 million resulting from the NV5 Acquisition.

Interest expense, net

Interest expense, net was $57.4 million for the six months ended June 30, 2026, an increase of $25.9 million, or 82%, compared to $31.5 million during the six months ended June 30, 2025. The increase in interest expense was primarily driven by an increase in our indebtedness as a result of the NV5 Acquisition.

Income taxes

The Company recorded an income tax benefit of $19.7 million for the six months ended June 30, 2026 compared to an income tax expense of $5.4 million during the six months ended June 30, 2025. The income tax benefit for the six months ended June 30, 2026 was primarily driven by the loss recognized in the period and the reversal of an uncertain tax liability from a prior acquisition. See “Note 13. Income Taxes” for further discussion.

Operating Segment Results

The following tables set forth summarized financial information about our reportable segments for the periods indicated.

Comparison of the three months ended June 30, 2026 to the three months ended June 30, 2025

Revenue

Cost of revenue

Gross profit

Inspection & Mitigation

Inspection & Mitigation revenues were $296.7 million for the three months ended June 30, 2026, a decrease of $17.2 million, or 5.5%, compared to $313.9 million during the three months ended June 30, 2025. The decrease primarily reflects lower outage activity resulting from shifts in customer schedules and the impact of customer site losses in 2025, partially offset by increased callout work.

Segment gross profit was $67.2 million for the three months ended June 30, 2026, a decrease of $6.9 million, or 9.2%, compared to $74.1 million during the three months ended June 30, 2025. The decrease was primarily driven by lower volumes of higher-margin outage activity and an associated shift in revenue mix toward run-and-maintain and callout activity relative to the prior-year period.

Consulting & Engineering

Consulting & Engineering revenues were $206.6 million for the three months ended June 30, 2026 due to the NV5 Acquisition. During the period, the Consulting & Engineering segment experienced growth primarily attributable to data center, buildings, and infrastructure activity, with data centers growth concentrated in APAC and the United States. Segment gross profit was $97.6 million for the three months ended June 30, 2026.

Geospatial

Geospatial revenues were $81.0 million for the three months ended June 30, 2026 due to the NV5 Acquisition. During the period, the Geospatial segment experienced growth primarily attributable to work for power and utilities clients and federal agencies. Segment gross profit was $39.3 million for the three months ended June 30, 2026.

Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025

Revenue

Cost of revenue

Gross profit

Inspection & Mitigation

Inspection & Mitigation revenues were $531.5 million for the six months ended June 30, 2026, a decrease of $16.6 million, or 3%, compared to $548.1 million during the six months ended June 30, 2025. The decrease primarily reflects lower outage activity resulting from shifts in customer schedules, the impact of customer site losses in 2025, and lower capital project activity, partially offset by increased callout work.

Segment gross profit was $108.0 million for the six months ended June 30, 2026, a decrease of $9.8 million, or 8%, compared to $117.8 million during the six months ended June 30, 2025. The decrease was primarily driven by lower volumes of higher-margin outage and capital project activity and an associated shift in revenue mix toward run-and-maintain and callout activity relative to the prior-year period.

Consulting & Engineering

Consulting & Engineering revenues were $394.0 million for the six months ended June 30, 2026 due to the NV5 Acquisition. During the period, the Consulting & Engineering segment experienced growth primarily attributable to data center, buildings, and infrastructure activity, with data centers growth concentrated in APAC and the United States. Segment gross profit was $186.8 million for the six months ended June 30, 2026.

Geospatial

Geospatial revenues were $146.8 million for the six months ended June 30, 2026 due to the NV5 Acquisition. During the period, the Geospatial segment experienced growth primarily attributable to work for state and regional governments and work for power and utilities clients. Segment gross profit was $70.7 million for the six months ended June 30, 2026.

Liquidity and Capital Resources

Overview

Overall, we believe that available cash and cash equivalents, cash flows generated from future operations, access to capital markets, and availability under the revolving credit facility are sufficient to fund our operations, service our indebtedness, and maintain compliance with our debt covenants over the next 12 months and for the foreseeable future. Our uses of available cash, borrowing capacity, cash flows from operations and financing arrangements are used to invest in capital expenditures to support our growth, repay debt maturities as they become due, and complete integration activities. Our principal liquidity requirements are for working capital and general corporate purposes, including capital expenditures and debt service, as well as to execute and integrate strategic acquisitions. In addition, we will use available cash, borrowing capacity, and cash flows from operations to fund our operating leases, finance leases, debt repayments, and various other obligations as they arise.

Financing

As of June 30, 2026, we had $1.6 billion of indebtedness outstanding under the Term Loans. We also have a $125.0 million five-year senior secured Revolving Credit Facility, of which up to $50.0 million can be used for the issuance of letters of credit. As of June 30, 2026, no amounts were outstanding under the Revolving Credit Facility. For discussion of the First Amendment, the Second Amendment, the Third Amendment, and the Fourth Amendment to our Credit Agreement, see “Note 11. Long-Term Debt” of the notes to our unaudited condensed consolidated financial statements.

For discussion of the covenants contained in the Credit Agreement governing our Revolving Credit Facility, see “Note 11. Long-Term Debt” of the notes to our unaudited condensed consolidated financial statements. As of June 30, 2026, we were in compliance with these covenants.

Cash Flows

The following table summarizes net cash flows with respect to our operating, investing and financing activities for the periods indicated:

36

Operating activities

Net cash provided by operating activities for the six months ended June 30, 2026 was $0.2 million, a decrease of $26.1 million compared to cash provided by operating activities of $26.3 million during the six months ended June 30, 2025. The decrease was a result of changes in our working capital, partially offset by increases in our net income adjusted for noncash items primarily driven by increased revenues. The changes in our working capital that contributed to decreased cash flows from operations were primarily a result of increases in accounts receivable of $36.7 million and increases in contract assets of $32.5 million due to timing of project billing cycles, partially offset by increases in accrued expenses and other current liabilities of $20.0 million.

Investing activities

For the six months ended June 30, 2026, net cash used in investing activities was $33.4 million, an increase of $5.0 million compared to net cash used in investing activities of $28.4 million during six months ended June 30, 2025. The increase in cash used in investing activities was primarily a result of increased purchases of property and equipment of $12.9 million, partially offset by decreased cash paid for acquisitions of $6.3 million.

Financing activities

For the six months ended June 30, 2026, net cash used in financing activities was $40.8 million, an increase of $30.5 million compared to net cash used in financing activities of $10.3 million during the six months ended June 30, 2025. The increase in cash used in financing activities was primarily a result of an increase in payments on finance lease obligations and other long-term debt of $13.0 million and an increase in payments related to repurchases of common stock of $15.7 million.

Effect of exchange rate changes

For the six months ended June 30, 2026 and June 30, 2025, the effect of foreign exchange rate changes on cash was $(3.1) million and $3.3 million, respectively. The impact of exchange rates on cash and cash equivalents is primarily attributable to fluctuations in the U.S. Dollar exchange rate against the Canadian Dollar.

Off-Balance Sheet Arrangements

During the six months ended June 30, 2026 and June 30, 2025, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Recently Issued Accounting Pronouncements

See “Note 1. Basis of Presentation and Significant Accounting Policies” of the notes to our unaudited condensed consolidated financial statements for disclosures regarding recently issued accounting pronouncements and the critical accounting policies related to our business.

Critical Accounting Estimates

There have been no significant changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the 2025 Annual Report, except for the changes discussed in Note 1. Basis of Presentation and Significant Accounting Policies of the Notes to the Consolidated Financial Statements.

We manage our exposure to interest rate risk through the proportion of fixed-rate and variable-rate debt in our debt portfolio. To reduce our exposure to changes in interest rates on our variable-rate borrowings, we may enter into interest rate swap agreements that synthetically convert a portion of our variable-rate debt to fixed-rate debt. As of June 30, 2026, we had one interest rate swap agreement with a notional amount of $800.0 million. Under the agreement, which matures on July 30, 2031, we pay a fixed rate of 3.91% and receive one-month Term SOFR, subject to a zero-percent floor.

As of June 30, 2026, we had $1.6 billion of outstanding variable-rate term-loan borrowings under our Credit Agreement. After giving effect to the interest rate swap agreement, $800.0 million of these borrowings was effectively subject to a fixed benchmark interest rate and $831.8 million remained subject to variable interest rates. Based on our outstanding borrowings as of June 30, 2026, a hypothetical, instantaneous and unfavorable increase of 100 basis points in applicable interest rates would have resulted in an approximate $8.3 million annualized negative impact on our earnings before income taxes as well as cash flows.

Evaluation of Disclosure Controls and Procedures

Management maintains and assesses the effectiveness of our disclosure controls and procedures as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These disclosure controls and procedures provide reasonable assurance that the information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosure. These disclosure controls and procedures are also designed to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by SEC rules and forms.

Based on this assessment, our CEO and CFO concluded that, as of June 30, 2026, our disclosure controls and procedures were not effective at a reasonable assurance level due to the material weaknesses previously disclosed in our 2025 Annual Report.

Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

As indicated above, we identified material weaknesses in our internal control over financial reporting as:

• We did not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we lacked a sufficient complement of resources with (i) an appropriate level of accounting knowledge, training, and experience to appropriately analyze, record and disclose accounting matters timely and accurately, and (ii) an appropriate level of knowledge and experience to establish effective processes and controls. This material weakness contributed to the following additional material weaknesses.
• We did not design and maintain effective controls related to the period-end financial reporting process, including designing and maintaining formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures; further, we did not design and maintain effective controls over the preparation and review of account reconciliations and journal entries, including maintaining appropriate segregation of duties.

These material weaknesses resulted in the misstatement of our income tax provision (benefit) and deferred tax liabilities and related financial statement disclosures which resulted in the restatement of our financial statements for the predecessor period January 1 through July 29, 2024. These material weaknesses also resulted in immaterial audit adjustments to our previously issued annual and interim consolidated financial statements in the following financial statement line items: accounts receivable; prepaid expenses and other current assets; accounts payable; accrued expenses and other current liabilities; deferred tax liabilities; current portion of lease obligations; non-current lease obligations; revenue; cost of revenue; selling, general and administrative expenses; and interest expense. Additionally, these material weaknesses could result in a misstatement of all of the Company’s accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

• We did not design and maintain effective information technology (“IT”) general controls for information systems that are relevant to the preparation of our consolidated financial statements. Specifically, we did not design and maintain:
• User access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel;
• Program change management controls to ensure that information technology program and data changes are identified, tested, authorized, and implemented appropriately;
• Computer operations controls to ensure that processing and transfer of data, and data backups and recovery are monitored; and
• Program development controls to ensure that new software development is tested, authorized and implemented appropriately.

These IT deficiencies did not result in a material misstatement to the consolidated financial statements, however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Accordingly, management has determined these deficiencies in the aggregate constitute a material weakness.

Management’s Plans to Remediate the Material Weaknesses

Management is in the process of developing a remediation plan for the material weaknesses that have been identified. The material weaknesses will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. The Company is implementing enhancements to its internal controls to remediate the identified material weaknesses in its internal control over financial reporting. We are committed to maintaining an effective control environment and will continue to monitor the effectiveness of these efforts, adjusting as necessary.

Specifically, the Company has:

• Engaged a third-party advisor to support the design and implementation of internal control over financial reporting in accordance with the Sarbanes-Oxley Act (“SOX”);
• Hired skilled professionals with a strong background in developing and improving control environments to strengthen the finance organization;
• Delivered targeted training across the Company on SOX requirements, internal control over financial reporting, segregation of duties and other critical control environment topics;
• Completed a financial statement risk assessment and documented business processes and internal controls deemed critical to financial reporting;
• Developed and begun implementing enhanced policies and procedures for journal entries, account reconciliations, and other core accounting processes;
• Began assessing the design and operating effectiveness of internal control over financial reporting;
• Initiated remediation of segregation of duties conflicts and improvements to user access protocols; and
• Implemented monitoring controls over key information systems and applications relevant to financial reporting.

In addition, the Company plans to continue hiring qualified accounting, finance and IT personnel with the necessary skills and expertise to support ongoing remediation and sustain an effective control environment.

While these remediation efforts are expected to significantly improve our internal control over financial reporting, they require time to be fully implemented and validated. Additional controls may also be required over time as the Company evolves. The Company will not be able to conclude that the material weaknesses have been remediated until the new and enhanced controls have been in place for a sufficient period of time and have been tested for both design and operating effectiveness.

Changes in Internal Control Over Financial Reporting

Other than the changes described above, there have not been any changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As of the filing of this report, we continue to implement the changes and remediation plans described above.

Our operations and financial results are subject to various risks and uncertainties. There have been no material changes in our risk factors from those previously disclosed in Part 1, Item 1A, “Risk Factors” in our 2025 Annual Report on Form 10-K.